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Nov 9, 2020

McDonald's surpasses Wall Street's sales expectations again

David Fingold discusses McDonald's

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McDonald’s Corp. reported better-than-expected results for the third quarter as the global pandemic continued to give restaurants with robust drive-thru and delivery footprints a lift.

The chain posted revenue of US$5.42 billion, surpassing analysts’ expectations for the fourth straight quarter. Adjusted earnings per share of US$2.22 also beat. The burger chain had previously reported same-store sales for the quarter, including 4.6 per cent growth in the U.S. that wasn’t enough to offset weakness abroad. Globally, same-store sales dropped 2.2 per cent.

The stronger-than-forecast results come as customers craving comfort food and touchless experiences increasingly turn to fast food. The burger giant had already been revamping digital options before the virus hit, including touchscreen ordering and increased delivery options, allowing it to maintain sales even when eat-in dining rooms were temporarily closed earlier this year in parts of the U.S. and beyond.

McDonald’s shares rose as much as 6.5 per cent in premarket trading Monday in New York. The stock was up 9.6 per cent this year through Friday, just ahead of the S&P 500.

Even so, challenges remain. McDonald’s said several of its key markets have reintroduced restrictions on in-person dining, from reduced hours to dining-room closures, including France, Germany, Canada and the U.K. In the quarter ended Sept. 30, the Chicago-based company had already reported negative same-store sales in Latin America, China and several key European markets.

Things are stronger in McDonald’s home market. A brisk drive-thru business in the U.S. and limited-edition celebrity meals featuring Travis Scott and J Balvin helped the U.S. return to growth. Spicy chicken nuggets -- a short-term menu item that drew buzz -- also brought in customers. Still, U.S. comparable guest counts remained negative for the quarter, meaning fewer customers placed orders -- they just spent more whenever they did.

The company will also host a virtual investor update Monday to share strategic priorities and plans for future growth, McDonald’s said when it announced results.